Limitada v. Hollywood Auto Mall, LLC, Civil No.12cv0945 AJB (MDD)

CourtUnited States District Courts. 9th Circuit. United States District Court (Southern District of California)
PartiesCOMERCIALIZADORA RECMAQ LIMITADA, Plaintiff, v. HOLLYWOOD AUTO MALL, LLC, California limited liability company dba HOLLYWOOD MOTORS; MOHAMAD REZA GHASEMI, an individual; and JAIME SOTOMAYOR, an individual Defendants.
Docket NumberCivil No.12cv0945 AJB (MDD)
Decision Date20 May 2013






(Doc. No. 38)

Presently before the Court is Defendant Mohamed Ghasemi's ("Ghasemi") motion to dismiss, (Doc. No. 38), Plaintiff Comercializadora Recmaq Limitada's ("Recmaq") first amended complaint ("FAC"), (Doc. No. 35). Recmaq filed an opposition on May 1, 2013. (Doc. No. 41.) As of the date of this order, Ghasemi, who is proceeding pro se, has not filed a reply. Pursuant to Civil Local Rule 7.1.d.1, the Court finds the motion suitable for determination on the papers and without oral argument. Accordingly, the motion hearing set for June 6, 2013, is hereby vacated. For the reasons set forth below, Ghasemi's motion to dismiss the FAC is GRANTED IN PART AND DENIED IN PART. Recmaq is granted limited leave to amend the FAC in compliance with this order. No new claims or parties may be added without leave of court.

I. Factual Background

This case involves an alleged oral contract entered into in 2002, by and between Recmaq and Defendants Hollywood Auto Mall, LLC ("Hollywood Auto Mall"), Ghasemi, and Jamie Sotomayor ("Sotomayor") (collectively, "Defendants").1 (FAC ¶11.) Pursuant to the oral contract, Defendants agreed to locate heavy machinery for sale at auctions in the United States, and advise Recmaq of the availability, condition, and specifications of the machinery. (Id. at ¶ 11.) Upon further instruction by Recmaq, Defendants, through Sotomayor and Ghasemi, would then purchase the machinery for the benefit and on behalf of Recmaq. (Id. at ¶¶ 19, 20.)

The FAC further alleges that pursuant to the oral contract, when Sotomayor and Ghasemi located a piece of machinery for Recmaq, Sotomayor was instructed to contact Recmaq to determine if Recmaq wished to submit a bid for the machinery at the auction. (Id. at ¶20.) In the event Recmaq wished to bid on the machinery, the FAC alleges that Sotomayor represented that Recmaq was required to deposit earnest money with the auctioneers in order to prove that Recmaq was capable of purchasing the machinery. (Id. at ¶ 21.) If the machinery was successfully purchased, the earnest money was subtracted from the purchase price. (Id.) Sotomayor would then transmit an invoice to Recmaq for the remaining balance owed to the auctioneer or seller, whereby Recmaq would then transfer the appropriate funds via wire transfer to Sotomayor and Ghasemi, who would then pay the balance due the auctioneer. (Id. at 22.) If the machinery was not purchased,the earnest money was returned to Sotomayor and Ghasemi and held on account for Recmaq. (Id.) The FAC also alleges that for each piece of equipment purchased by Recmaq, Sotomayor and Ghasemi received an undisclosed commission. (Id. at 25.)

In or around August 2005, the FAC alleges that Drago Gluscevic ("Gluscevic"), Recmaq's owner, visited both Sotomayor and Ghasemi at a location Ghasemi described as his personal residence. (Id. at 27.) At these meetings, Recmaq alleges that Gluscevic spoke with both Sotomayor and Ghasemi about bidding on machinery at auctions and future business opportunities between the parties. (Id.) At one or both of these meetings, the FAC alleges that Ghasemi showed Gluscevic how Ghasemi specifically bid on the machinery at auctions. (Id.) After the August 2005 meetings, the FAC alleges that Gluscevic spoke directly with Ghasemi over the telephone regarding their business relationship. (Id. at 28.)

The FAC then alleges that there were multiple occasions in which Recmaq transferred money to Sotomayor and Ghasemi for the purchase of machinery, but that Recmaq never received the machinery or a return of the previously transferred funds. (Id. at ¶¶ 29-36.) For example, the FAC alleges that on or around December 31, 2009, Recmaq transferred $338,400.00 to Sotomayor and Ghasemi for the purchase of eight Caterpillar "backhoe loaders," but that Defendants have neither delivered the machinery or returned the transferred funds. (Id. at ¶ 29.) Thereafter, on or around March 3, 2010, the FAC alleges that Recmaq transferred an additional $139,500.00 to Sotomayor and Ghasemi for the future purchase of three Caterpillar "420 E 2008," but that Defendants have neither delivered the machinery or returned the transferred funds. (Id. at ¶ 30.) The FAC alleges that before Recmaq transferred the additional $139,500.00 to Sotomayor and Ghasemi in March 2010, Sotomayor informed Recmaq that the eight Caterpillar "back-hoe loaders," which had yet to be delivered to Recmaq, would either be delivered to Recmaq, or the $338,400.00 in transferred funds would be returned to Recmaq no later than June 2010. (Id. at 29.) Recmaq never received either the machinery or the funds. (Id.)

In addition to the funds listed above, the FAC alleges that Recmaq transferred $240,000.00 to Sotomayor and Ghasemi to be held on account for deposit as earnest money at four different auctions, and that Recmaq transferred an additional $381,100.00 to Sotomayor and Ghasemi for the purchase of heavy machinery at various dealers.2 (Id. at ¶¶ 31, 32.) The FAC also alleges that Sotomayor falsely told Recmaq that $60,000.00 was required in order to qualify as a bidder at these auctions, when in fact, Recmaq later discovered that only $10,000.00 was required. (Id. at ¶ 31.) To date however, Defendants have not delivered any of the machinery as promised, nor have Defendants returned any portion of the funds transferred to Defendants for the purchase of such machinery. (Id. at ¶¶ 29-32.) As a result, Recmaq alleges it has transferred $1,099,000.00 to Sotomayor and Ghasemi, but has not received any equipment or a return of such funds. (Id. at ¶ 33.)

On or about January 12, 2011, Frank Keller ("Keller"), an attorney retained by Recmaq, met with Sotomayor at the office of Hollywood Auto Mall, which is located at 1423 Broadway, El Cajon, California 92021. (Id. at ¶ 34.) The FAC alleges that the purpose of this meeting was to discuss repayment of the debt Sotomayor and Ghasemi owed to Recmaq. (Id.) At the January 12, 2011 meeting, the FAC alleges that Sotomayor admitted to Keller that he and Ghasemi owed money to Recmaq, and that Ghasemi, his former business partner, had defrauded both him and Recmaq by stealing funds from Hollywood Auto Mall, including the funds Recmaq had transferred to Defendants. (Id.) On January 17, 2011 Sotomayor provided Keller a written statement, which is attached to the FAC as Exhibit A (Spanish) and Exhibit B (English translation). (Id. at Exs. A, B.)

II. Procedural History

On April 17, 2012, Recmaq filed a complaint against Defendants alleging fifteen causes of action, including: (1) fraud; (2) conspiracy to commit fraud; (3) breach ofcontract; (4) RICO violation, 18 U.S.C. 1962(c); (5) RICO conspiracy, 18 U.S.C. 1962(d); (6) conversion; (7) unfair business practices under California's Unfair Competition Law ("UCL"); (8) intentional interference with prospective economic advantage; (9) breach of the implied covenant of good faith and fair dealing; (10) breach of fiduciary duty; (11) unjust enrichment; (12) account stated; (13) debt; (14) money lent; and (15) money paid. (Doc. No. 1.) On July 12, 2012, the clerk entered default against Hollywood Auto Mall and Sotomayor. (Doc. No. 9.) The Clerk did not enter default against Ghasemi at this time because Recmaq had failed to effectuate service of the summons and complaint on Ghasemi.

After Ghasemi failed to timely respond to the complaint, the Clerk entered default against Ghasemi on November 13, 2012. (Doc. No. 18.) On November 14, 2012, Ghasemi filed a motion to dismiss the complaint, which was rejected by the Court as untimely. (Doc. No. 19.) On November 26, 2012, Recmaq filed a motion for default judgment against all three Defendants. (Doc. No. 20.) On December 14, 2012, Ghasemi filed a motion to set aside the entry of default, (Doc. No. 23), which was granted by the Court on February 6, 2013, (Doc. No. 31). Ghasemi then filed a motion to dismiss the complaint, (Doc. No. 33), which was vacated as moot after Recmaq filed the FAC, (Doc. No. 37). On April 10, 2013, Ghasemi filed the instant motion to dismiss. (Doc. No. 38.)


A motion to dismiss a complaint under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Black, 250 F.3d 729, 732 (9th Cir. 2001). Rule 8(a)(2) requires that a pleading stating a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The function of this pleading requirement is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed.2d 929 (2007). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factualallegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. A complaint does not "suffice if it tenders naked assertions devoid of further factual enhancement." Ashcroft v. Iqbal, 556 U.S. 662, 667, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. "All allegations of material fact are taken as true and construed in the light most favorable to plaintiff. However, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for...

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